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Los Angeles, CA – II
A commercial broker and partner of Lima One, had a client that was looking to purchase and rehab a 3,800 square foot home in West Hollywood – an upscale and trendy neighborhood of Los Angeles, California. The home, built in 1937, was in a condition to resell as is, but the borrower opted to remodel the property with mid-century modern design to capitalize on the opportunity to resell it as a luxury fix and flip property in a market experiencing all-time-high home prices.
By the Numbers:
$3,740,000
Loan Amount
$4,800,000
Purchase Cost
$400,000
Rehab Budget
$5,900,000
After-Repair Value
The Opportunity
A commercial broker and partner of Lima One, had a client that was looking to purchase and rehab a 3,800 square foot home in West Hollywood – an upscale and trendy neighborhood of Los Angeles, California. The home, built in 1937, was in a condition to resell as is, but the borrower opted to remodel the property with mid-century modern design to capitalize on the opportunity to resell it as a luxury fix and flip property in a market experiencing all-time-high home prices.
The Solution
Even though the purchase price of the home was above the current appraisal, Lima One was able to underwrite the property based on the after-repair value of $5.9 million. This gave the investor nearly half a million dollars in profit after the $4.8 million purchase and $400,000 renovation.
The 19-month, interest-only loan minimized overall financing costs, on top of the added benefit of the investor not having to pay interest on undrawn construction funds. The result was an opportunity for the investor to create equity on a luxury property for a maximum profit and the ability to scale his fix and flip
business.
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